Google-Yahoo Deal Draws DOJ Probe

After this week's Independence Day celebration in Washington,
Google and Yahoo can expect even more fireworks as their proposed advertising
deal goes before Congress and the Department of Justice.

The Senate Committee on Commerce, Science & Transportation plans to jump
in with a July 9 hearing on the privacy implications of online behavioral
advertising that will surely focus on the deal to run Google's search and
contextual advertising technology on Yahoo's search engine.

Meanwhile, a newspaper report claims that the DOJ has opened a formal
investigation into the advertising arrangement that Yahoo expects to generate
between $250 million and $450 million in operating cash flow during the first
12 months of the four-year deal.

Both Yahoo and Google have insisted there are no antitrust implications to
the deal since there is no merger between the companies involved. Nevertheless,
the nation's two largest search companies agreed to delay the deal for three
months to give Washington time to
review it.

According to the Washington Post,
the DOJ inquiry will not only focus on the Google-Yahoo deal but will also
encompass other large Internet companies involved in behavioral advertising.

"There is nothing unexpected in the review of this arrangement as
structured by the parties and Department of Justice officials," Yahoo told
the newspaper in a statement. But a former head of the DOJ's civil nonmerger
division told the Post, "They
don't do it without having identified significant issues."

"We will closely examine the joint venture between Google and Yahoo,"
Kohl said in a June 12 statement. "This collaboration between two
technology giants and direct competitors for Internet advertising and search
services raises important competition concerns."

Yahoo
CEO Jerry Yang met with Kohl June 18 to discuss the deal. He also met with
U.S. Rep. Ed Markey, chairman of the House Subcommittee on Telecommunications, while
the Internet. Rep. Joe Barton, the minority leader of the Telecommunications
and Internet panel, mailed Yang a list of eight questions about the deal.

"Given the consolidation within the online advertising
industry, and with three companies dominating the U.S. online search market, I am concerned about how this
collaboration will impact competition within the online search advertising
industry," Barton wrote. "I am also concerned about how the relationship
between Google and Yahoo will affect the collection, storage and use of data
relating to an individual's online activity."